Over $70 bn wiped off global crypto market, Bitcoin drops below $20,000
The collapse of three banks, including US-based giant Silicon Valley Bank (SVB), hammered the global crypto market in less than a week, wiping out more than $70 billion as Bitcoin plunged below $20,000 a coin.
On Monday, Bitcoin was hovering around $18,000 and Peter Schiff, CEO of Euro Pacific Capital, predicted that the world’s largest cryptocurrency would soon drop below $4,000.
Two crypto-friendly banks, Silvergate Capital and Signature Bank, collapsed last week, leaving behind billions of dollars belonging to crypto exchanges.
Signature Bank was closed by New York regulators and all of Signature Bank’s depositors were “made whole.”
As of December 31, 2022, Signature Bank had $88.59 billion in deposits and the New York Department of Financial Services has acquired the bank.
Leading crypto exchange Coinbase had $240 million in cash in Signature Bank.
“As of the close of business on Friday March 10, Coinbase had approximately $240m of corporate cash on hand at Signature. We expect to recover these funds in full, as stated by the FDIC,” the crypto exchange said in a tweet.
Circle, the company behind the USDC stablecoin, has been hit by the closure of Signature Bank.
Its CEO Jeremy Allaire said in a tweet that due to the closure of Signature Bank, “Signnet will no longer be able to process minting and redemption, relying on settlements through BNY Mellon”.
“Additionally, we will soon bring on board a new transaction banking partner with automated minting and redemption capabilities. We are committed to building robust and automated USDC clearing and balance operations,” he added.
Crypto giant Circle also sunk $3.3 billion into non-crypto bank SVB, which collapsed last week, sparking panic in the tech industry.
Bankrupt crypto lender BlockFi also has $227 million in funds tied up in SVB.
Top cryptocurrency exchanges Binance and Coinbase temporarily halted USDC stablecoin conversions after SVB’s collapse.
Another US traditional bank, Silvergate Capital, announced last week that it would “wind down its operations and voluntarily liquidate” its banking unit.
Interest rate hikes in the past year have adversely affected risk assets such as cryptocurrencies.